Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2021, for Business Solutions follow. $121,868 Total liabilities $859 Total equity $121,009 Total assets Required: 1. The bank has offered a long-term secured note to Business Solutions. The bank's loan procedures require that a client's debt-to-equity ratio not exceed 0.74. As of March 31, 2021, what is the maximum amount that Business Solutions could borrow from this bank? Note: Round your intermediate calculations to the nearest dollar amount. 2. Assume Business Solutions borrows the maximum amount allowed from the bank. Note: Round your intermediate dollar values to the nearest whole number and final answers to 1 decimal place.
Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2021, for Business Solutions follow. $121,868 Total liabilities $859 Total equity $121,009 Total assets Required: 1. The bank has offered a long-term secured note to Business Solutions. The bank's loan procedures require that a client's debt-to-equity ratio not exceed 0.74. As of March 31, 2021, what is the maximum amount that Business Solutions could borrow from this bank? Note: Round your intermediate calculations to the nearest dollar amount. 2. Assume Business Solutions borrows the maximum amount allowed from the bank. Note: Round your intermediate dollar values to the nearest whole number and final answers to 1 decimal place.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Step 1: Debt-to-equity ratio:
VIEWStep 2: (1) Determine the maximum amount that Business Solutions could borrow from the bank:
VIEWStep 3: (2.a) Determine the percentage of assets would be financed by debt:
VIEWStep 4: (2.b) Determine the percentage of assets would be financed by equity:
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